200 practice questions and answers
for the CEP (Certified Estate Planner)
exam, organized by topic.
Domain 1: Estate Planning Foundations & Principles
1. Which of the following is included in the definition of estate planning?
Asset management
Accumulation of wealth
Asset preservation
A) 1 only B) 1 and 2 C) 2 and 3 D) 1, 2, and 3
Answer: D – Estate planning is a comprehensive process that encompasses the management
of assets during life, the accumulation of wealth through strategic planning, and the preservation
of assets for transfer to intended beneficiaries.
2. The primary goal of estate planning is to:
A) Avoid all taxes
B) Transfer wealth according to the client's wishes
C) Eliminate probate entirely
D) Increase investment returns
Answer: B – Estate planning focuses on ensuring assets are distributed according to the client's
intentions while balancing tax, legal, and family considerations. Tax avoidance is a secondary
goal.
3. Which document directs the distribution of assets at death?
A) Living trust
B) Durable power of attorney
C) Will
D) Healthcare proxy
Answer: C – A will legally specifies how assets are distributed after death and names executors
and guardians.
,4. Probate is best described as:
A) A tax audit
B) Courtsupervised estate administration
C) Trust funding process
D) Asset valuation method
Answer: B – Probate is the legal process through which a deceased person's estate is
administered under court supervision.
5. Which asset typically avoids probate?
A) Individually owned real estate
B) Assets titled in a revocable trust
C) Personal property
D) Business inventory
Answer: B – Assets held in a properly funded revocable trust pass outside probate.
6. Which estate planning goal primarily focuses on avoiding court involvement?
A) Charitable giving
B) Probate avoidance
C) GST tax reduction
D) Business succession
Answer: B – Probate avoidance is the goal of keeping assets out of the courtsupervised probate
process.
7. Which designation controls distribution of a life insurance policy?
A) Will
B) Trust
C) Beneficiary form
D) Letter of intent
Answer: C – The beneficiary designation on the life insurance policy controls distribution, not the
will or trust.
,8. A letter of intent is:
A) A legally enforceable document
B) Used for medical decisions
C) A guidance document to aid executors
D) Required by probate court
Answer: C – A letter of intent is a nonbinding guidance document that helps executors
understand the decedent's wishes.
9. A living will provides instructions for:
A) Tax elections
B) Investment strategy after death
C) Endoflife medical care
D) Asset distribution
Answer: C – A living will documents an individual's preferences for endoflife medical care.
10. Intestate succession applies when a person dies:
A) With a trust
B) With a will
C) Without a valid will
D) With beneficiaries
Answer: C – Intestate succession is the default distribution process when someone dies without
a valid will.
11. A revocable living trust becomes irrevocable:
A) When signed
B) At funding
C) At death of the grantor
D) After court approval
Answer: C – Revocable trusts generally become irrevocable upon the grantor's death.
, 12. Who creates a trust?
A) Trustee
B) Beneficiary
C) Grantor
D) Executor
Answer: C – The grantor (or settlor) establishes the trust and transfers assets into it.
13. A trustee's primary duty is to:
A) Minimize taxes
B) Follow beneficiary instructions
C) Administer the trust according to its terms
D) Maximize investment returns
Answer: C – The trustee's fundamental duty is to administer the trust in accordance with its
terms and in the best interests of the beneficiaries.
14. Executor duties include all EXCEPT:
A) Paying estate debts
B) Filing tax returns
C) Creating new trusts after death
D) Distributing assets
Answer: C – Executors administer the existing estate; they do not create new trusts after death.
15. Which trust is used to own life insurance outside the taxable estate?
A) QTIP trust
B) ILIT (Irrevocable Life Insurance Trust)
C) Revocable living trust
D) Sprinkling trust
Answer: B – An ILIT owns life insurance policies outside the insured's taxable estate.
16. A bypass trust (credit shelter trust) primarily saves:
A) Income tax
B) Probate fees
for the CEP (Certified Estate Planner)
exam, organized by topic.
Domain 1: Estate Planning Foundations & Principles
1. Which of the following is included in the definition of estate planning?
Asset management
Accumulation of wealth
Asset preservation
A) 1 only B) 1 and 2 C) 2 and 3 D) 1, 2, and 3
Answer: D – Estate planning is a comprehensive process that encompasses the management
of assets during life, the accumulation of wealth through strategic planning, and the preservation
of assets for transfer to intended beneficiaries.
2. The primary goal of estate planning is to:
A) Avoid all taxes
B) Transfer wealth according to the client's wishes
C) Eliminate probate entirely
D) Increase investment returns
Answer: B – Estate planning focuses on ensuring assets are distributed according to the client's
intentions while balancing tax, legal, and family considerations. Tax avoidance is a secondary
goal.
3. Which document directs the distribution of assets at death?
A) Living trust
B) Durable power of attorney
C) Will
D) Healthcare proxy
Answer: C – A will legally specifies how assets are distributed after death and names executors
and guardians.
,4. Probate is best described as:
A) A tax audit
B) Courtsupervised estate administration
C) Trust funding process
D) Asset valuation method
Answer: B – Probate is the legal process through which a deceased person's estate is
administered under court supervision.
5. Which asset typically avoids probate?
A) Individually owned real estate
B) Assets titled in a revocable trust
C) Personal property
D) Business inventory
Answer: B – Assets held in a properly funded revocable trust pass outside probate.
6. Which estate planning goal primarily focuses on avoiding court involvement?
A) Charitable giving
B) Probate avoidance
C) GST tax reduction
D) Business succession
Answer: B – Probate avoidance is the goal of keeping assets out of the courtsupervised probate
process.
7. Which designation controls distribution of a life insurance policy?
A) Will
B) Trust
C) Beneficiary form
D) Letter of intent
Answer: C – The beneficiary designation on the life insurance policy controls distribution, not the
will or trust.
,8. A letter of intent is:
A) A legally enforceable document
B) Used for medical decisions
C) A guidance document to aid executors
D) Required by probate court
Answer: C – A letter of intent is a nonbinding guidance document that helps executors
understand the decedent's wishes.
9. A living will provides instructions for:
A) Tax elections
B) Investment strategy after death
C) Endoflife medical care
D) Asset distribution
Answer: C – A living will documents an individual's preferences for endoflife medical care.
10. Intestate succession applies when a person dies:
A) With a trust
B) With a will
C) Without a valid will
D) With beneficiaries
Answer: C – Intestate succession is the default distribution process when someone dies without
a valid will.
11. A revocable living trust becomes irrevocable:
A) When signed
B) At funding
C) At death of the grantor
D) After court approval
Answer: C – Revocable trusts generally become irrevocable upon the grantor's death.
, 12. Who creates a trust?
A) Trustee
B) Beneficiary
C) Grantor
D) Executor
Answer: C – The grantor (or settlor) establishes the trust and transfers assets into it.
13. A trustee's primary duty is to:
A) Minimize taxes
B) Follow beneficiary instructions
C) Administer the trust according to its terms
D) Maximize investment returns
Answer: C – The trustee's fundamental duty is to administer the trust in accordance with its
terms and in the best interests of the beneficiaries.
14. Executor duties include all EXCEPT:
A) Paying estate debts
B) Filing tax returns
C) Creating new trusts after death
D) Distributing assets
Answer: C – Executors administer the existing estate; they do not create new trusts after death.
15. Which trust is used to own life insurance outside the taxable estate?
A) QTIP trust
B) ILIT (Irrevocable Life Insurance Trust)
C) Revocable living trust
D) Sprinkling trust
Answer: B – An ILIT owns life insurance policies outside the insured's taxable estate.
16. A bypass trust (credit shelter trust) primarily saves:
A) Income tax
B) Probate fees
